Switzerland is grappling with a milk surplus of approximately 126 million kilograms, prompting the industry to cut prices for an extended 11-month period. This article explores the reasons for the overproduction and the impact on Swiss farmers.
"The entire milk production system was simply left to its own devices."
"I will lose around CHF 16,000 ($20,092) in revenue over the year."
Switzerland is drowning in milk. A staggering surplus of 126 million kilograms has flooded the market, forcing the dairy industry into a corner. The response is swift and severe: for the first time in history, the sector has locked in a price reduction for nearly an entire year. Starting February 1, 2026, the price for A-segment milk—the high-quality liquid destined for Swiss breakfast tables—will be slashed by CHF 0.04 to CHF 0.78 per kilogram.
This is not a temporary blip. By fixing this lower price for 11 months, the Milk Sector Organisation is signaling that this glut is a structural crisis, not a seasonal fluctuation. The sheer volume of excess milk has rendered the previous quarterly pricing model obsolete. The industry is desperate for stability, even if that stability comes at the cost of producers' margins. With 126 million kilograms of excess inventory weighing down the supply chain, the market has lost its buoyancy, and the correction is hitting hard and fast.
How did we get here? Swissmilk attributes this crisis to a convergence of factors that created a perfect storm for overproduction. Nature played a cruel trick: a summer of exceptionally favorable weather produced abundant, high-quality feed. Cows, feasting on lush grass, surged in productivity, pumping out milk at rates the market simply could not absorb.
Simultaneously, geopolitical headwinds battered the export market. US tariffs have injected volatility into the global trade arena, causing uncertainty across the European Union and depressing export figures. Swiss dairy, unable to offload its product abroad, was forced to dump it back onto the domestic market. Compounding the misery are unfavorable currency effects and already bloated butter stocks. It is a classic case of supply shock meets demand paralysis. The industry measures this crisis in kilograms, not liters—a critical distinction, as the density of milk means the weight exceeds the volume, making the surplus even heavier than it appears on paper.
The heart of the problem lies in the cheese sector. Stefan Kohler, managing director of the milk sector organisation, points to a dangerous widening gap between Swiss and foreign prices. With nearly 50% of Swiss milk processed into cheese, the industry is tethered to the partially liberalized cheese market. We are not an island; we are locked in fierce competition with our European neighbors.
When the price gap becomes too cavernous, Swiss cheese loses its competitive edge. It risks being swept off supermarket shelves, replaced by cheaper foreign alternatives. The price cut is a defensive maneuver—a necessary evil designed to stop that gap from becoming an unbridgeable chasm. While the A-segment price drops, the B-segment (export) and C-segment (world market excess) prices remain depressingly low, with the latter languishing at a mere CHF 0.27. The strategy is clear: sacrifice price per kilo now to save market share later.
For the farmers on the ground, these macroeconomic adjustments translate into brutal financial losses. Boris Beuret, president of the Swissmilk producers’ association and a farmer himself, puts a price tag on the pain: "I will lose around CHF 16,000 in revenue over the year." For a mid-sized operation with 60 cows in Jura, this is a significant blow to the bottom line.
Despite the financial hemorrhage, Beuret supported the price cut, citing the "interest of stability." But stability requires sacrifice. Farmers are now forced to take drastic measures to curb production. Beuret reveals he is adjusting feeding practices to lower yields and, more grimly, sending older cows to slaughter earlier than planned. The industry is cannibalizing its own assets to survive the glut. It is a stark reminder that in the ledger of agricultural economics, the farmer always pays the first installment.
Experts argue this is not just bad luck; it is a systemic failure. Mathias Binswanger, an economics professor, asserts that the milk production system was "left to its own devices," creating a landscape rife with contradictions. The current agricultural policy is a paradox: it incentivizes farmers to become hyper-productive and slash costs, pushing them toward high-yield, feed-intensive farming.
However, this industrial drive destroys the very image Switzerland tries to sell. "What we actually want to promote – grassland-based farming with cows spending the summer on Alpine pastures – risks being lost," Binswanger warns. We are subsidizing a race to the bottom where cows are fed imported feed to produce milk nobody needs, while the traditional Alpine herdsman becomes a relic of the past. As the industry waits for supply and demand to rebalance, the soul of Swiss farming hangs in the balance.